Innovation and government involvement have made a real difference in creating jobs at assembly plants across the country. Unfortunately, this growth is not reflected in auto component parts manufacturing.
Data from 2009 and 2010 reveal auto assembly employment rose 3.3 percent but parts manufacturing employment rose only 0.1 percent. The automakers themselves make up only part of the industry, accounting for one quarter of auto industry jobs. The meager growth of companies making auto parts, where three quarters of these jobs reside, is concerning.
The primary reason for the slower recovery of auto parts manufacturing is the rapid growth of imports from China, which has increased our auto parts trade deficit eight-fold since 2001. The success of the auto parts export industry in China is not due to any inherent comparative advantage. Rather, it is a result of the explicit illegal and predatory polices of the Chinese government.
According to a recent Economic Policy Institute report, between 2001 and 2010 the auto parts industry in China received $27.5 billion in government subsidies, many of which violate international commitments and undermine the international trade system. Factor in the steep discount all manufacturers in China enjoy due to manipulation of the countrys currency, and we have a bigger crisis. Intentionally 40 percent undervalued by some estimates, this tactic is the elephant in the room. Everyone knows it happens but few are brave enough to do anything about it.
Throughout our history and still today, Indiana has led in automotive ingenuity, with more than 400 automobile models crafted in 78 Hoosier counties. Kokomos pride was the 1893 Haynes Pioneer, the first gas-propelled automobile. Seymour lays claim to its predecessor, the 1880 Siefker steam buggy. Today, the worlds largest manufacturer of fully automatic transmissions, Allison Transmission, is headquartered in Indianapolis. Federal Mogul has a presence in six Indiana locations, with its fuel pump operations being one of the biggest employers in Cass County. BF Goodrich has produced millions of tires over the past 50 years in Woodburn, employing more people than the towns population. From final assembly to the nuts and bolts, in almost every pocket of this state, we are the auto industry.
According to the EPI, Indiana ranks second in the nation by share of employment in auto parts employment. Out of 1.6 million auto parts jobs in the nation, Indiana has 132,769 of them; workers making engines, hoses, tires, seals, windshields and more.
Most of us know at least one person relying on the automotive industry for their livelihood. Most of us can also imagine what life would be like without those good jobs in our state.
At a time when many of our industries are in flux, the question is asked: Why should we care about auto parts manufacturing?
The answer for Hoosiers should be simple; it is a primary engine of our economic growth. College tuition, vacations to Pokagon, and tithes to the church depend on it. But slowly these jobs are being eroded by unfair trade practices overseas.
It is not too late to revitalize the auto parts industry and keep those jobs and our economy thriving. Lets not trade away our automotive jobs for automotive museums. We can and should have both in our great state.
The future of American industry and its employees can be bright, but only if there is a will to make it so. Please ask your legislators what they plan to do to level the playing field. After all, our state motto shouldnt be Restart your Engines if we arent ready to put our foot on the gas.